Business

General Electric shares plunge after report alleges it's a 'bigger fraud than Enron'


August 15 at 12:30 PMGeneral Electric shares plunged Thursday after a Madoff whistleblower accused the conglomerate of using accounting tricks to hide $38 billion in losses and called it “a bigger fraud than Enron."


The investigator, who is collaborating with an unnamed hedge fund, claims that GE understated its costs and liabilities and misled investors in its financial statements.


The research, first reported by the Wall Street Journal , alleges that the problems are focused on GE’s insurance business, asserting that the company is short on cash.


Researchers who reviewed GE’s financial statements from 2002 to 2018 alleged that the company does not have enough cash to cover the claims on long-term care policies, which help people pay for nursing homes and assisted living.


Enron had been a $100 billion-a-year behemoth and Wall Street superstar until the Houston energy trader was exposed as a “ mind-numbingly complex ” spider web of financial maneuvering and hidden debts.


GE said Markopolos is working with hedge funds that are “financially motivated to generate short selling in a company’s stock to create unnecessary volatility.”






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